Apple’s iPhone 5c Is Just $20 – $30 Cheaper to Make Than iPhone 5s – Teardown

Far from the major departure that many had expected, the iPhone 5c turned out to follow Apple’s familiar formula, combining premium pricing with a hardware design almost completely identical to the original iPhone 5, according to preliminary results from the teardown analysis service at IHS.

The low-end model of Apple’s iPhone 5c with 16GB of NAND flash memory carries a bill of materials (BOM) of $166, based on a physical dissection of the production. The cost rises to $173 when the $7 manufacturing expense is added in. The 32GB model carries a combined cost of $183. It turns out that inexpensive Apple iPhone 5c is not that cheap after all. For example, Apple’s top-of-the-range iPhone 5s 16GB costs $198.7 to build, which is just $25.7 more.

The table presents the preliminary BOM based on a physical dissection of the iPhone 5c conducted by the IHS Teardown Analysis Service. Note that the teardown assessment is preliminary in nature, accounts only for hardware and manufacturing costs and does not include other expenses such as software, licensing, royalties or other expenditures.

To attain the cost and pricing required to merit low-end pricing of $400, while maintaining Apple’s customary high hardware margin, the combined BOM and manufacturing expense for the iPhone 5c would have had to amount to about $130, according to IHS.

“The iPhone 5c is basically an iPhone 5 in a plastic disguise. Just as in the original iPhone 5, the 5c uses an Apple A6 processor, a 4” retina display, and LPDDR2 DRAM, among other commonalities. Because of this, the iPhone 5c benefits from the normal cost reductions that typically occur for electronic devices during the period of a year. The combination of the design and component reuse – and the plastic enclosure – has allowed Apple to offer a less expensive version of the iPhone, although it’s still not cheap enough to be a true low-cost smartphone,” said Andrew Rassweiler, senior director, cost benchmarking services for IHS.

Since the Apple iPhone 5c is generally the iPhone 5, it is less expensive to manufacture thanks to decline of prices due to volume of scale, improved yields, advances in manufacturing technology and other reasons. For example, the display module in the 5c carries a cost of $41, down 7% from $44 one year ago.

“Maintaining the same specification and the same suppliers for the panels as the iPhone 5 has helped Apple hold the line on its display costs for the 5s. Japan Display Inc., LG Display and Sharp have been the main display suppliers for the iPhone 5 for more than a year, allowing Apple to provide them the opportunity to enhance their manufacturing yields and efficiencies,” said Vinita Jakhanwal, director of mobile and emerging displays and technology at IHS

The biggest difference between the iPhone 5c and the original iPhone 5 lies in the radio frequency (RF) transceiver, which has been updated to support more 4G/LTE bands. The 5c uses Qualcomm’s WTR1605L RF transceiver, which supports up to seven simultaneous LTE connections during operations. The iPhone 5 used the older RTR8600L RF transceiver, also from Qualcomm, that supported only up to five active LTE bands.